5 Things You Need to Know to Start Your Day: Americas

Good morning. Stocks pull back after another strong week, BlackRock’s Rieder says the Fed should cut, not hike, to bring down inflation, and [View in browser]( [Bloomberg]( Good morning. Stocks pull back after another strong week, BlackRock’s Rieder says the Fed should cut, not hike, to bring down inflation, and a commodities veteran reckons he’s found the best trade he’s ever seen. Here’s what traders are talking about. — [David Goodman]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. Stocks falter Global stocks flattened at the end of another strong week for the asset class. US futures pointed slightly lower, denting a fourth weekly gain for the S&P 500 and likely pushing the Dow Jones Industrial Average further below the record 40,000 level it briefly surpassed on Thursday ([a milestone John Authers says is meaningless](). Meanwhile the dollar and Treasuries held steady. Fedspeak The pullback comes hand-in-hand with a slight paring of Fed rate-cut bets, spurred by several policy makers[suggesting the central bank should keep borrowing costs higher for longer]( as they await more evidence inflation is easing. Investors will now be watching comments from Fed officials Christopher Waller and Neel Kashkari later today for further clues about the interest rate path. Cut, not hike But BlackRock’s Rick Rieder tells Bloomberg that perhaps the Fed should think differently, suggesting the best way to temper inflation would be to [lower rates, not hold them higher](. Rieder told Bloomberg’s David Westin for an upcoming episode of Wall Street Week airing Friday that middle- to higher-income Americans “are getting a big benefit from these interest rates” through fixed income investments and the same groups are keeping service inflation higher through their spending. China rescue package The biggest news of the day came from China, which announced [its most forceful attempt yet]( to shore up the beleaguered property market by easing mortgage rules and encouraging local governments to buy unsold homes from developers for conversion into affordable housing. Policymakers are bringing a sense of urgency to lifting the country’s plummeting real estate sector after official data Friday showed that home prices recorded their steepest month-on-month drops in a decade in April despite a slew of incremental policies to aid the sector.  Best trade ever? Commodities veteran Jeff Currie reckons being long copper is [the best trade he's ever seen](. The mismatch between rapidly-growing demand and sluggish supply has already helped push copper prices to more than $10,000 a ton in London trading this week. But, [in a new episode of the Odd Lots podcast](, the chief strategy officer of the Energy Pathways team at Carlyle Group, who has been in the market for more than 30 years, says the metal still has room to climb. What we’ve been reading This is what’s caught our eye over the past 24 hours. - Meme stock surge [signals froth]( in equities, MLIV Pulse survey shows - ECB’s Schnabel says [back-to-back cuts]( don’t look warranted. - [BOJ keeps bond buying unchanged]( after surprise cut on Monday. - UK assets are on the [best run this year](. - Jefferies balked at Archegos cash plea, asking ‘[what’s the emergency?](bbg://news/stories/SDLMSHT0AFB4)’ And finally, here's what Kristine’s interested in this morning Even before Thursday's pullback in stocks and bonds, there were signs the recent rally was looking overexuberant. One is the fact that the S&P 500 and 10-year Treasury yields are diverging by the most since bets on Federal Reserve rate cuts for 2024 were near their peak. Granted, the absolute level of the two assets’ inverse correlation is relatively low at -0.36. But that’s the strongest since mid-December, just after Fed Chair Jerome Powell signaled a lower path for borrowing costs, which turbocharged rate-cut bets and propelled both equities and fixed income. Of course, we know what’s happened since then. Re-emerging signs of stubborn inflation and a US economy that remains relatively robust have prompted policymakers to temper their outlook. Data this week revived the idea of a Goldilocks scenario, wherein contained inflation and more subdued growth would pave the way for cuts. That drove equity gauges to all-time highs and generated the biggest gain for Treasuries in months. Yet overhyping expectations for such an outcome puts investors at risk of getting wrong-footed once more, as today’s pullback shows. [Kristine Aquino]( is managing editor for Bloomberg's markets live blogs. Follow her on X at [@krisaqnews](. 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